Hence, you may wonder - what is the 'consolidation of company codes? This has its advantage over using the consolidation of companies and assigning a dependent company to each company code, and to generate the company's individual financial statement by creating subgroups in Consolidation reporting.

Basics of Consolidated Financial Reports A business that holds controlling shareholding stakes or majority board positions in subsidiary entities must prepare consolidated financial statements. It has its limitations, however, when dealing with differentiating currency translation methods or eliminating entries, which, when needed, are easily accomplished with the tools in the consolidation system.

However, this simplified method has a few restrictions, at present, the first being procedural: When preparing consolidated financial statements, you must eliminate some entries to avoid duplicating or overstating financial data. The consolidation process involves combining the financial statements of the parent company with those of the subsidiaries.

References Berkeley University of California: You can, of course, also use the FI Balance Sheet program to directly generate cross-company code and cross-currency financial statements.

Please note, however, that this method does not meet all requirements for the individual financial statement in consolidation, but merely those for generating a balance sheet and an income statement.

Such entries include inter-unit purchases, sales, financing and equity transactions. Consolidating Company Codes Business Units By definition, a company is a legal entity that is required by trade laws to disclose individual financial statements.